5 Easy Ways To Learn About Investing

“An investment in knowledge pays the best interest.” – Benjamin Franklin

During Soviet era communism, citizen behavior was managed through a monopoly on information. It was the duty of the KGB to know all they could about information flow and to tightly control it. When Gorbachev became head of the Soviet Communist party, he recognized that a crisis confronted the rigid system of central planning in a world that was becoming increasingly competitive and in which information technology was changing economic and social realities. He persuaded the party elite that if socialism were to survive, economic restructuring (perestroika) would be necessary along with greater openness (glasnost) so that information could be better utilized. What he failed to realize, however, was that once his policy of glasnost took effect, there would be no turning back – people could see for themselves that the only way toward a normal life and improved living standards was to end communism and let markets deliver what consumers wanted rather than what the state dictated.

The fall of Soviet Communism is not unlike the current revolution that is rocking Wall Street. A glasnost-like spread of information is educating everyday investors on how Wall Street really works. Educated investors are using technology for cheap and effective investing and lowering their fees, their risk and increasing their returns. The once expensive stockbroker has been replaced by discount online brokerages that provide excellent trade execution. High cost and ineffective mutual funds are being upended by low-cost and tax efficient ETFs. Even investment advisers operating in expensive wood-paneled offices are now being replaced, along with their annual management fees, with unbiased and effective online services like MarketRiders.

This is all part of an information revolution that is rooted in the education of everyday investors. Educating yourself on proven principles of money management is the cornerstone of investment success. Fortunately, the erudite, technical finance textbooks are being translated into layman’s terms by kind authors who wish to bring the investing strategies of elite institutions and the world’s wealthiest families to every American. In that spirit, we are celebrating the back-to-school season with our own selection of easy-to-read and engaging books on investing:

The Seeking Alpha ETF Investing Guide (Free): David Jackson, who founded Seeking Alpha, wrote a web-based book on ETF Investing that provides an interesting and compelling primer on the MarketRiders approach. It is free and easy to read.

Transparent Investing: What Your Broker Doesn’t Want You To Know (Free): Patrick Geddes is a good friend of the MarketRiders team and a leading expert on index investing. Co-founder and Chief Investment Officer of Aperio Group, and formerly the CFO and Director of Quantitative Research at Morningstar, Patrick offers this free downloadable book for any student who cares to learn how to best manage his retirement on his website “Transparent Investing.” Click on “I Want the Full Story in More Detail” to download it.

The Elements of Investing: The Elements of Investing by Burt Malkiel and Charles Ellis is a timeless and easy to read guide that has a single-minded goal: to teach the principles of investing in the same manner that Professor William Strunk Jr. once taught composition to students at Harvard – using his classic little book, The Elements of Style. The great thinking and teaching styles of Ellis and Malkiel make even the most academic concepts accessible and fun to read.

The Bogleheads’ Guide to Investing: The authors wrote this book as a service to all investors and all royalties from book sales are donated to charity. As one reviewer states, The Bogleheads’ Guide is both a textbook for beginners and a refresher course for old hands. It blends elements of financial-planning primers like The Wealthy Barber with tips on why it pays to be cheap, a la The Millionaire Next Door. We think you would love it!

All About Asset Allocation: Our good friend Rick Ferri is a serious thinker when it comes to retirement investing. Having learned the shenanigans of the Wall Street scene from the inside, Rick ventured out and built a leading retirement investment company called Portfolio Solutions that offers low-cost portfolio management rooted in modern portfolio theory. His book on asset allocation is a must read for any serious student of the index approach.